Network sees potential for $200m a year more

Network sees potential for $200m a year more from wool

New Zealand’s failure to market strong wool based on its true value is costing the country at least $200 million annually in lost export earnings.

That’s according to the Wool Industry Network, which has today released a discussion document aimed at revitalising and growing the profitability of New Zealand’s $1 billion wool industry.

Wool Industry Network Chief Executive Mike Jones says New Zealand strong wool is internationally recognised for its superior attributes. Strong wool makes up over 85% of the wool produced in New Zealand and is used predominantly for carpets. New Zealand produces 30% of the world’s supply of strong wool.

“Yet we’ve got an industry in decline, with shrinking export receipts, reduced infrastructure and increasing discontent within the sector. You’ve got to ask yourself – what’s going wrong?

“What’s wrong,” Mike Jones says, “is not the wool, it’s the way we’re selling it.

“We’ve got a product with a point of difference, which is seen as superior to that of other producing countries, yet we’re not selling it on that basis. It moves through the chain from the grower to the market as a commodity, being sold on price, not on value, and price based competition has seen strong wool prices decline year on year.”

The Wool Industry Network, set up last year by Meat and Wool New Zealand, has identified in its discussion document the need for better integration of the supply chain to market – what the Network calls “Integrated Value Chains”.

“There is a lot of fragmentation in the wool supply chain”, Mike Jones says, “the wool changes hands and ownership a number of times as it moves up that supply chain and there ends up being a disconnect between producer and market.

“We’ve got a situation where growers are supplying into a vacuum. They’re not being asked to supply what the market needs, they have little understanding of the end use market and price is not linked to the quality of their wool.”

The other effect of this is that the New Zealand wool industry does not benefit from its volume advantage. The wool makes its way to market through multiple traders all of whom compete largely on price and terms.

“Inevitably, if growers don’t see value for their wool, the quality is affected and that in turn will impact on New Zealand’s market share.”

The Network wants to see the industry transformed into one where market needs are clearly identified, producers grow their product to meet those needs and enjoy returns reflecting the value of their product to the market.

“What we’re proposing requires a market driven approach to the way the wool industry operates. It requires a streamlining of the path to market, strong branding and market support, and the development of market-led science and workplace skills” Mike Jones says.

The Network recognises that such change can only occur with the support of the sector, which is why it is going out and asking growers, industry groups and sector representatives for their views on the document.

“We’ve identified what we see as the problem and the way to fix it. But in terms of the detail of how to put in place the solution, we want to hear from the sector as to how they see that best achieved.”

Mike Jones says that it is the wool sector itself that must embrace the need for change. The Wool Industry Network wants to work alongside the sector to help effect the changes.

The Wool Industry Network will spend the next four weeks seeking feedback on the discussion document ahead of finalising a Wool Sector Strategy. Submissions on the discussion document are due on April 27 and can be made by post or email.

Copies of the discussion document are available on the Network’s website www.woolnetworknz.co.nz .

ENDS

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